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ITRN 603 December 9, 2009 Nana Konadu * Sara Majroh * Brooke Markley

Conflict Diamonds. ITRN 603 December 9, 2009 Nana Konadu * Sara Majroh * Brooke Markley. Diamonds. Diamond industry sectors: mining, rough diamond trading and sorting, and cutting and polishing De Beers = 40 percent of diamond mines

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ITRN 603 December 9, 2009 Nana Konadu * Sara Majroh * Brooke Markley

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  1. Conflict Diamonds ITRN 603 December 9, 2009 Nana Konadu * Sara Majroh * Brooke Markley

  2. Diamonds • Diamond industry sectors: mining, rough diamond trading and sorting, and cutting and polishing • De Beers = 40 percent of diamond mines • Main diamond centers: London, New York, Tel Aviv, Johannesburg, Bombay and Dubai • US largest consumer of diamonds • retail sales in 2005 worth US$33.7 billion

  3. Trading Diamonds • opportunities for illicit trade, including trade in conflict diamonds • U.S. control over diamond imports • data inconsistencies • industry practices of selling goods on consignment or unloading stockpiles so that trade data differ from production capacities • false declarations by importers • smuggling

  4. Conflict Diamonds • Conflict diamonds are mined in a war zone and sold to finance an insurgency, invading army's war efforts, or a warlord's activity, usually in Africa • Non-transparent industry operations and illicit trade • diamonds used in lieu of currency in arms deals, money laundering, and other crime • More than 3 million deaths, more than 6 million displaced • Crimes against humanity

  5. Countries • Sierra Leone – civil war from 1991-2002 • Angola – several civil wars between two opposing factions • Liberia – civil war from 1989 to 2003 • Democratic Republic of Congo – civil war from 1960 to 1999 • Ivory Coast – civil war started in 1999 • Zimbabwe – production and smuggling

  6. Annual Global Summary • 2008 Production, Imports, Exports and KPC Counts

  7. Actors • World Federation of Diamond Bourses (WFDB) http://www.worldfed.com/website/ • World Diamond Council (WDC) http://www.worlddiamondcouncil.com/

  8. What is the Kimberley Process? U.N. Gen Assembly adopts resolution supporting int’l certification scheme Entered into force Sets requirements for controlling rough diamond production and trade Who contributed to its development? Participating country governments International diamond industry (World Diamond Council) Civil society organizations (Global Witness and Partnership Africa Canada) Timeline: Kimberley Process Certification Scheme Created Talks begin in Kimberley, South Africa May 2000 Dec 2000 Nov 2002 2003 Source: http://www.kimberleyprocess.com/home/index_en.html

  9. Kimberley Process Participant Voluntary suspension of exports and imports Under UN sanctions Kimberley Process Participants *Participants account for 99.8% of global rough diamond production Source: http://www.kimberleyprocess.com/structure/participants_world_map_en.html

  10. What Does the KPCS Require? • Participants must meet ‘minimum requirements’ • National legislation and institutions • Export, import, and internal controls • Commit to transparency and the exchange of statistical data • Participants can only legally trade with other participants • Shipments must be accompanied by a KP certificate that guarantees the diamonds are “conflict-free”

  11. What Has the KPCS Done for the World? • In less than 6 years, the KPCS has evolved into an effective mechanism for stemming trade in conflict diamonds: • Conflict diamonds now represent a fraction of one percent of trade, compared to 15% in the 1990’s • It has also helped promote peace and security: • Stabilize fragile countries • Brings large volumes of diamonds into the legal market • $125 million exported from Sierra Leone in 2006, compared to none in the 1990’s • Greater transparency in gathering statistical data that is available to the public: • https://mmsd.mms.nrcan.gc.ca/kimberleystats/publicstats.asp

  12. U.S. Sanctions Against Sierra Leone and Liberia • January 18, 2001 – EO 13194 was issued • Prohibits the import of rough diamonds from Sierra Leone* • May 22, 2001 – EO 13213 was issued • Prohibits import of rough diamonds from Liberia • July 30, 2003 - EO 13312 was issued • Amends and harmonizes EO13194 and EO13213 in order to implement the CDTA • Maintains prohibition of imports of rough diamonds from Sierra Leone* and Liberia

  13. Clean Diamond Trade Act • CDTA was passed on April 25, 2003 • Authorizes the President to take steps to implement the KPCS: • Prohibits importation of any rough diamond that has not been controlled through the KPCS • Requires diamond importers to keep full records relating to the importation of rough diamonds • Requires annual reviews for oversight Source: http://www.state.gov/documents/organization/77550.pdf

  14. Clean Diamond Trade Act Con’t • Technical assistance to countries seeking to implement the KPCS • Statistics and reporting • Establishes the Kimberly Process Implementation Coordinating Committee • Co-chairs: the Secretary of Treasury and the Secretary of State • The Secretary of Commerce • The United States Trade Representative • The Secretary of Homeland Security

  15. CDTA and KPCS Support Legitimate Diamond Trade 2008 1998 10% 57% $611 Million $794 Million Botswana, Namibia, South Africa & Tanzania Others Source: Global Trade Atlas, U.S. imports 7102.10, 7102.21 and 7102.31

  16. Kimberly Process Challenges • Consensus based decision making: One or two participants with vested political or commercial interests can hold up forward movement on any and everything. • Monitoring: Peer review is voluntary . Some reviews are slow and affected by the vested interest of team members. • Sanctions in cases of non compliance: Extreme reluctance to sanction any kind of suspension. Issue of transparency: Reports of review teams remain confidential Source: Global Witness

  17. Kimberly Process Challenges Discrepancy in export reporting statistics • Example in the DRC over the course of the six-year period from 2003- 2008, the difference between the CEEC’s own statistics and those submitted to the KP total over 2.5 million carats and US$21 million. The difference between the KP’s numbers and those kept by the Ministry of Mines is even greater. • Human Rights: The Kimberley Process has turned a blind eye to human rights abuse in the diamond industry. Ex: October 2008 massacre in Zimbabwe

  18. Clean Diamond Trade Act Challenges • United States does not periodically inspect rough diamond imports or exports to ensure that the contents of the rough diamond parcels match the Kimberley Process certificates. • United States lacks an effective system for confirming receipt of imports • United States has not had a plan for monitoring (U.S. Kimberley Process Authority) USKPA, but is developing and testing one. Diamond mining site in Sierra Leone. Source GAO

  19. Policy Proposal Provisions of the Kimberly Process need to be enforced. • To end the constant deadlock, a voting system can be created. • Requires an independent statistical analysis, monitoring and research capacity that would set a high standard of evaluation, avoid conflict of interest and ensure follow-up. • KP must move swiftly to deal with cases of non compliance. There must be strong sanctions to demonstrate that the KP is serious • Issue of transparency: All KP Reviews can be placed, in full, on the open KP web site

  20. Conclusions Kimberly Process is too important to fail The cost of its collapse could be disastrous to the industry and for the millions of people who depend directly or indirectly on it. How you can help • http://www.globalwitness.org/data/files/media_library/473/en/uk_ai_gw_diamond_leafletfinal.pdf

  21. Sources • Video: http://www.youtube.com/watch?v=zqbOwywF-6Y&feature=player_embedded • Other Facets news letter October 2009: News and views on the international effort to end conflict diamonds. Special Issue: Kimberly Process Plenary 2009 • www.globalpolicy.org, “Diamond development initiative begins” August 2005 http://www.globalpolicy.org/component/content/article/182/33851.html • US Government Accountability Office, “Conflict Diamonds: Agency Actions Needed to Enhance Implementation of the Clean Trade Act” October 2006 http://www.gao.gov/new.items/d06978.pdf • Kimberley Process Certificate Process, http://www.kimberleyprocess.com/home/index_en.htm • Clean Diamond Trade Act http://www.state.gov/documents/organization/77550.pdf • Executive Order 13194 http://nodis.hq.nasa.gov/displayEO.cfm?id=EO_13194_ • Executive Order 13213 http://nodis3.gsfc.nasa.gov/displayEO.cfm?id=EO_13213_ • Executive Order 13312 of July 29, 2003, Federal Register, Vol. 68, No. 147, Thursday, July 31, 2003, Presidential Documents, Implementing the Clean Diamond Trade Act http://edocket.access.gpo.gov/2003/pdf/03-19676.pdf • Global Trade Atlas • Diamond Facts Organization http://www.diamondfacts.org/conflict/index.html • Amnesty International USA, Conflict Diamonds http://www.diamondfacts.org/conflict/index.html • World Bank, Conflict Diamonds March 2001 Working Paper Series No. 13 http://www.worldbank.org/afr/wps/wp13.pdf

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